«It is necessary to boost MUTUAL RELATIONS BETWEEN AZERBAIJAN AND RUSSIA»

 

Caspian Energy (CE): Mr Istratov, how would you evaluate the current relations between Azerbaijan and Russia?

Vassili Istratov, the Ambassador Extraordinary and Plenipotentiary of the Russian Federation to Azerbaijan: Positively. Over the past year the commodity turnover between the two countries rose by 50% and amounted to $1.5bln.

Nevertheless, it comes necessary to boost mutual relations. At present the range of commodity turnover between Azerbaijan and Russia, apart from energy carriers, comprises the goods with high additional value, which constitutes the basis for mutual cooperation increase.

 

CE: What are the actual forecasts of commodity turnover in the outlook?

Vassili Istratov: In fact, there is a potential for commodity turnover increase. So, let us take as granted that it rose by a half over this year. Now, with cancellation of Russian gas supplies to Azerbaijan these volumes will reduce to some extent.  Nonetheless, saying figuratively, the two economics are attracting each other.

 

CE: It comes that the commodity turnover will fall approximately by $700-$800mln, from which $500mln account for gas and the remainder for suspended oil delivery via Baku-Novorossiysk pipeline?

Vassili Istratov: This oil is not sold to us but just transferred via the RF, but, nevertheless, amounts of commodity turnover will, most likely, fall down. We do not know how much this amount will decrease as we are unaware of trends in our mutual commodity turnover, which is developing in quite a chaotic manner.  In other words, three tankers are shipped from here, or 300 carriages dispatched from there and this is called "commodity turnover". On the other hand, some of these contracts might be passed to the next year.

This is because it is not a planning economy and we do not have control figures to form the basis for mutual relations.

 

CE: What are the prospects of raising Azerbaijan's export to the RF?

Vassili Istratov: Today, if we remove the fuel content, we receive really good and "advanced" commodity turnover. The vast majority of these goods, as I said already, will be those with high additional value, not fuel but equipment and machinery. All this means that the trade is going on.

The main potential for commodity turnover increase, and it is taken quite seriously in Azerbaijan, is that Azerbaijani enterprises may significantly raise their export to Russia. However, this potential is still unused.

You know, Russia exports 260 kinds of goods, while Azerbaijan - only 60. Amounts of export and import are incomparable. Even if we exclude oil and gas, Russia considerably outpaces Azerbaijan in export. Azerbaijan has an opportunity to export all kinds of goods to Russia. Presently, Russia dominates in the commodity turnover structure with its import over $1bn during 2006.

 

CE: How is the process of talks with RUSAL on construction of aluminum plant in Azerbaijan proceeding? How would you evaluate the negotiation process as a whole?

Vassili Istratov: The talks between Azeri Government and Russkiy Aluminiy AO under the aluminum plant construction project are not complete to date. In case the contract is signed, Russian investments in Azerbaijan will grow by $1bn.

Nevertheless, the parties have not reached mutual understanding on energy supply issues. RUSAL insists on preferences for electric energy supply as the condition for aluminum facility construction. However, the current energy tariffs jeopardize the entire project.

Recently, two large companies with mutual interests, SUAL and RUSAL, have merged. Naturally, now they are jointly identifying the most important projects as the two companies' primary tasks differed before. I think these issues will be resolved very soon.

 

CE: Is the issue of electric energy export from Russia discussed for the project purposes?

Vassili Istratov: No, since the price for electric energy in Russia is almost the same as that in Azerbaijan.

 

Thank you for the interview